The COVID-19 pandemic led to an unprecedented collapse in oil demand as global lockdowns kept people indoors, halted industrial production and grounded flights. Oil prices even briefly turned negative in April 2020, reflecting the scale of the crisis. However, as economies reopened, oil demand rebounded sharply. Today, nearly five years after the pandemic, the world’s energy landscape is still adjusting to new realities.

While some predicted that the pandemic would accelerate the transition to renewable energy, the reality has been more complex. The demand for oil and gas has remained resilient, forcing major energy companies like BP plc (BP Quick QuoteBP - Free Report) , Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) and Chevron Corporation (CVX Quick QuoteCVX - Free Report) to reassess their strategies.

The Pandemic’s Lasting Impact on Oil Demand

The post-pandemic oil and gas market has been shaped by several key trends, reflecting changes in travel, commuting and energy investment priorities. One of the most significant shifts has been the return of mobility and travel. With restrictions lifted, global air travel has surged back to pre-pandemic levels, leading to a sharp rise in jet fuel demand. Airlines have responded to this resurgence by ordering record numbers of new aircraft to accommodate growing passenger numbers. At the same time, commuting patterns have evolved, with many people continuing to work remotely. However, overall road traffic remains high, sustaining gasoline and diesel consumption despite the increase in hybrid and remote work arrangements.

Another major shift has occurred in energy investment priorities. While many oil companies initially expanded their renewable energy portfolios in response to growing environmental concerns, recent market trends have prompted a reevaluation of these strategies. BP’s recent decision to scale back its renewable energy investments and focus more on oil and gas production signals a shift in expectations regarding future energy demand. Investors are now prioritizing higher returns, pushing major oil companies such as Shell (SHEL Quick QuoteSHEL - Free Report) , ExxonMobil and Chevron to reinforce their core fossil fuel operations rather than aggressively expanding into green energy.

These developments highlight the evolving dynamics of the post-pandemic energy landscape. While the transition to renewables remains an important long-term goal, the immediate demand for oil and gas remains strong, influencing corporate strategies and investment decisions across the industry.

Why is BP Scaling Back its Green Investments?

BP’s recent decision to scale back its renewable energy investments reflects a crucial reality — the global economy is not yet ready to transition entirely away from fossil fuels. Initially, BP committed to reducing its oil and gas business in favor of net-zero ventures, such as offshore wind and biofuels. However, CEO Murray Auchincloss acknowledged that the company transitioned too quickly, misjudging the ongoing demand for oil and gas. This miscalculation, combined with favorable oil prices, has led BP to shift its strategy. The company is now increasing its oil and gas investments by 20%, raising annual spending in this sector to $10 billion while cutting back on renewable energy projects.

What Does This Mean for Other Oil & Gas Companies?

Unlike BP, ExxonMobil and Chevron never made drastic commitments to reduce oil production. Instead, they have maintained a steady focus on expanding their fossil fuel assets while taking a cautious approach to renewable energy.

ExxonMobil has prioritized growth in its upstream portfolio, achieving record production from its Permian Basin and Guyana assets. The company is focused on increasing production, with a planned 50% rise in output from the Permian by 2030. At the same time, it is investing in carbon capture and hydrogen, with an emphasis on commercial viability rather than rapid expansion into renewables.

Chevron has followed a similar strategy, continuing oil and gas development while exploring lower-carbon solutions. It has expanded its production capacity in the Permian Basin and deepwater developments while selectively investing in renewable fuels, carbon capture and hydrogen. Its investments are targeted at areas where it can leverage existing expertise and infrastructure, ensuring financial sustainability.

Both companies have adopted a measured approach to energy transition, avoiding drastic reductions in oil production while selectively integrating low-carbon technologies into their portfolios.

Oil vs Renewables: What’s the Future?

Despite BP’s recent shift back to oil, renewables are here to stay. The transition to cleaner energy is still underway, but it is proving to be slower and more complex than many had anticipated. While governments and corporations continue pushing for net-zero goals, oil is expected to remain a dominant energy source for decades.

One of the key developments in the energy sector is the rise of carbon capture technologies. These allow oil companies to continue producing fossil fuels while significantly reducing emissions. As a result, major players in the industry are increasingly investing in carbon capture as a way to align with climate targets without abandoning their core business.

Hydrogen and biofuels are also emerging as long-term investment areas. Companies looking to balance profitability with sustainability are exploring these alternatives, recognizing their potential to play a crucial role in the future energy mix. While their adoption is still in the early stages, ongoing advancements and policy support could accelerate their growth.

Ultimately, the future of energy will be shaped by a mix of oil, renewables and innovative technologies. The shift toward cleaner energy is happening, but the pace and scale of change will depend on market conditions, technological breakthroughs and regulatory policies.